Canadian real estate has only two cities left standing, Vancouver and Toronto. Don’t tell Torontonians or Vancouver that though, they think the entire country is still booming. That’s natural, everyone projects their own reality onto the world. If their life is good, the world is good, and vice versa. Back to reality though, and reality is that real estate is cratering in Canada, one city at a time, starting from the outskirts and working its way to the core. It always happens like that.
Even big cities like Ottawa and Montreal are seeing their real estate going backwards, nevermind smaller cities and towns. Places like Kelowna B.C. crashed in 2009 and never really recovered, thought the locals will deny that fact to their grave. Take a look at the recent sale activity in Kelowna and compare it to 2008, nuff said.
What’s the point of all this gloom? To try to talk some sense into Canadians, wake them up. We’ve been systematically lulled into a coma by ever falling interest rates, which breed debt, which is a trap. It feels so good to spend money, especially cheap money, and Canadians are darn good at it too. Among the very best in the world in fact. Our political leaders have made sure of that, by lowering interest rates to the point where Canadians don’t ask how much, they ask how much per month.
Times like these never last, they can’t. Debt is borrowing time, and it will be repaid, usually when there are no alternatives, and in the most painful way you can imagine. It’s human nature, we like free stuff, and we don’t care what the future costs are, it feels too good to get something free now. So, while Canadians in just about every city in the country are beginning to feel the consequences of their decisions, those in Vancouver and Toronto are still giggling like schoolgirls, thinking they’ve gotten away with a free lunch. Their time will come, just ask Calgarians.
So, which city will be the last standing? Who would’ve thought Calgary would be next, considering they were the country’s economic engine and had the highest average wages? That should serve as a warning to us in Vancouver and Toronto, but I know it won’t. Heck, even Calgarians are still thinking this will end any day now and they can go back to their free spending ways. By the way, Albertans have the highest average debt load of any province, so you can well imagine they don’t want to contemplate $50 oil six months from now.
Although I have no clue whether it will be Vancouver or Toronto to feel the pain next, my money would be on Vancouver, for the simple fact that it’s closest to the bush fire of Canada’s oil crash. Analysts have been asking for years what the catalyst would be to start the Canadian economy downhill, well, I’m quite certain we’ve seen it.
I take no pleasure in writing these things, I’d much prefer to announce better days ahead, who wouldn’t? But that’s not what I see coming, as much as I wish it weren’t so. So I write this little Vancouver blog, one of many Vancouver blogs. My hope is that it’ll reach some people, and they’ll avoid a huge mistake that they’ll regret the rest of their lives.